Stocks retreated today, following an early-week rally fueled by a sharp rise in shares of financial companies. Major indexes in the U.S. are on track to close the week up more than 1.5%. Shares of the biggest U.S. banks are on track to end the week nearly 7% higher, buoying the broader market over the week.

The Dow is currently lower by 37 points at 17,888. The S&P 500 is at 2,079. Gold is trading at $1,233 an ounce, while oil futures at $40.40 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.41/Gal. Summer gas (higher priced) is in production.

The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 102.97 which is the highest it’s been since Feb 11th 2016. Prior to that you would have to go bake to Jan 2015. Our current trading range is about 101.50 to about 102.8. Each .50 change in the price of the security translates to about 0.125 in rate. Basically the change in the price of the security translates to the price (or points paid or credited) of the mortgage rate. The higher the number (price), the lower the rate.

On the political scene: The goal of most primary elections/caucuses is for voters to choose a favorite presidential candidate. Then based on the results, a representative (Delegates) then carry that vote to the national convention where they cast their vote for the nominee. If no candidate is chosen after the first vote those delegates who were bound by the vote of the people, are free to vote for whomever they personally prefer.

But apparently not in Colorado. The state GOP decided to cancel its normal caucus procedure, in part, because it said they were worried that too many people would turn out. Anyway, so instead of all registered Republicans choosing from the presidential candidates, just the “party insiders” voted on delegates to represent them at the national convention this summer. That’s where things got messy (North Dakota, Wyoming and three U.S. territories did the same thing, but Colorado’s un-caucus got the most press). Because pledged delegates are free after the first ballot to vote for whomever they’d like at the convention. The Republican Party got just what it wanted – a bunch of free agents.

Last week I mentioned that the U.S. “expansion” is already older than the average post World War II expansion and that the Fed Gods were debating on whether or not our economy is headed for a recession. Our business/economic cycle is a four stage process; Expansion/Growth-Prosperity-Recession-Recovery. The length of time we spend in each cycle varies. If we are in the “expansion” phase of the current cycle, just where is the prosperity? And if the economy is truly expanding (not just treading water) then why hasn’t the fed lifted interest rates as they normally do in a growth phase.

The Fed eases money supply (lower rates) in times of recession and tightens monetary policy in times of prosperity. The magnitude of our last recession was so major and the Fed in attempt to not let recession go into depression, had to enact much different easing measures such as purchasing bonds/mortgages from the market and lowering interest rates to levels not previously seen. The problem is that growth has not returned to levels needed to reverse policy and this their stimulus policy may have actually hurt the recovery. By keeping rates at which companies borrow money at basically zero, they have supported the stock market and now if they raise rates they risk a stock market correction which would derail any sort of recovery.

In economic news this week; Consumer confidence fell, our government is still spending money it doesn’t have, Retail sales fell again, and inflation is basically flat.

A measure of small-business sentiment in March slipped to a two-year low, a trade group said Tuesday. The National Federation of Independent Business said its small-business optimism index fell 0.3 points to 92.6. Four of the ten components fell. The major reasons 51% of owners think that the current period is a bad time to expand was a weak economy, the political climate was the second most frequently cited.

Consumer sentiment eased to 89.7 in the University of Michigan’s preliminary reading for April. That was down 1.3 points from a March reading of 91.0. Consumers’ views of the current situation fared better than their expectations: the current conditions index shed just 0.2 point to 105.4, while the expectations gauge was down 1.9 point to 79.6. It was the fourth-straight monthly decline, but Michigan’s survey director said in a release that he expects the gloom to ease as the economy brightens after a rocky first quarter. Now that’s speculation.

Our government ran a budget deficit (they spent more money than they made) of $108 billion in March, the Treasury Department said Tuesday, about double what it did in the same month in 2015. Spending for the month was $336 billion, or 17% more than the same month a year ago. In March, federal government spending rose for military programs, Medicare and other categories compared to last year. Despite the increase in March, the budget deficit is up just 5% for the fiscal year to date, to $461 billion. The government’s fiscal year runs from October through September.

Sales at U.S. retailers fell in March for the second time in three months to end the first quarter on a weak note, a sign consumers are reluctant to boost spending despite improved household finances and a sturdier labor market. Retail sales dropped 0.3% last month, the Commerce Department said Wednesday. The soft pace of retail sales from January through March is likely to contribute to another weak quarter of U.S. growth when the government reports gross domestic product later this month.

U.S. wholesale prices fell 0.1% in March despite a rise in the cost of gasoline, reflecting the low level of inflation in the guts of the economy. Instead producer prices were held in check by a deep decline in trade margins for retailers and wholesalers. The price of a barrel of oil has hit $40 again after briefly dipping below $30 earlier in the year. Over the past year overall producer prices have fallen 0.1% in unadjusted terms. Stripping out the volatile categories of food, energy and trade, core prices were flat in March. Core prices have risen 0.9% in the past 12 months, unchanged from the rate in February.

The consumer price index, CPI, rose by seasonally adjusted 0.1% last month after falling 0.2% in February, the Bureau of Labor Statistics said Thursday. The higher cost of filling up at the gas pump offset lower prices for groceries and new clothes to push inflation a touch higher in March. Energy prices climbed 0.9% to mark the first increase in four months. Gas prices rose last month, as did the cost of electricity. The price of food, on the other hand, fell 0.2%. The cost of groceries posted the biggest one-month decline since 2009, partly reflecting lower prices charged by farmers for staple crops such as corn and wheat.

Over the past 12 months the CPI has risen at a 0.9% rate, down a tad from February. The Fed would like to see inflation rise a bit before it raises interest rates again, but the latest CPI suggests price pressures remain muted.Stripping out food and energy, so-called core prices also rose 0.1% last month. Core consumer prices have risen at a 2.2% annual clip, down from 2.3% in the prior month.

The Federal Reserve’s business contacts reported some upbeat news on two troublesome issues that have held down the economy: low wages and the troubled oil and gas sector. The Fed’s Beige Book, released Wednesday, again used the phrase “modest to moderate” to describe growth in the U.S. economy, and the Fed’s contacts said they thought growth “would remain in that range going forward.” But there were pockets of optimism in the report, which is a collection of anecdotes about the economy.At its last meeting in March, the Fed scaled back its projection for rate hikes this year to two from four, citing overseas risks to the domestic economy. Fed Chairwoman Janet Yellen elaborated on these risks in an interview released by Time Magazine Tuesday, saying there were many things about the global economy were uncertain.

On the Employment front: The number of Americans who applied for unemployment benefits last week fell by 13,000 to 253,000, matching the lowest mark since the end of the Great Recession and sinking to a level last seen in 1973.The U.S. has generated millions of jobs over the past five years, putting many Americans back to work and keeping the economy on a slow but stable growth path in the wake of the devastating 2007-2009 downturn. Many companies these days are not only reluctant to part with current employees, they complain it’s harder to find enough qualified people to fill open positions. The low level of claims is also a sign the economy was still adding jobs in April at a healthy clip. Low claims usually correlate with strong employment reports.

If you like this commentary please visit and “Like” my Facebook page. I put all of my prospective buyers through underwriting so that when they place their offer, it is as close to “cash” as you can get. So to get your clients “underwriter approved”, please contact me and get your offer accepted!

I have a personal App for your phone that replaces my business card. You can contact me (various formats), run the mortgage calculator, get RE/Mortgage news, and have access to my social media sites including this weekly commentary. You can even share my app with others. Please check it out and let me know what you think. Click on the following link from your phone and hit “add to home screen, then click “add” and you’re done.

Rising oil prices buoyed stocks Friday, but major U.S. indexes still ended a rocky week in the red. Stocks around the globe declined this week, as worries resurfaced about the ability of central bankers to lift a sluggish global economy after years of easy monetary policy. It marks the second week of declines in three weeks for major U.S. stock indexes.

The Dow closed higher by 30 points at 17,576. The S&P 500 closed at 2,047. Gold is trading at $1,240 an ounce, while oil futures at $39.66 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.43/Gal. Summer gas (higher priced) is in production.

The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 102.97 which is the highest it’s been since Feb 11th 2016. Prior to that you would have to go bake to Jan 2015. Our current trading range is about 101.50 to about 102.8. Each .50 change in the price of the security translates to about 0.125 in rate. Basically the change in the price of the security translates to the price (or points paid or credited) of the mortgage rate. The higher the number (price), the lower the rate.

The Fed “All Stars” if you will, got together this week for a little pow-wow. Janet Yellen and three former Fed leaders sought to “dispel” worries the U.S. is heading back toward recession despite concerns about slow global growth and the expansion’s advancing age. Ms. Yellen, joined Thursday in an unusual gathering in New York by former Fed Chairmen Ben Bernanke, Alan Greenspan and Paul Volcker, described an economy that is progressing without breeding obvious new financial bubbles that could derail growth.

Mr. Bernanke stated: “The domestic U.S. economy is moving forward, and I don’t see any particular reason to believe a recession is any more likely in 2016 than it was in 2015 or 2014.” Though the U.S. expansion is already older than the average post World War II expansion, he said expansions don’t die of old age. Instead, they reverse when imbalances throw off spending and investment. Messrs. Greenspan and Volcker largely concurred.

Taken altogether, their comments marked a sign of guarded confidence from a quartet of the world’s most powerful economic policy makers, past and present, at a moment with political undertones. Republican presidential front-runner Donald Trump has argued the U.S. is a bubble economy heading toward severe recession. The Fed’s own critics (including myself) have argued its low interest rate policies and repeated bond-purchase programs have inflated financial asset prices and made them prone to decline.

The Fed took extraordinary measures during and after the 2007-2009 financial crisis, including bailouts of banks and the giant insurer American International Group Inc., along with bond-purchase programs that have swelled its portfolio of assets. Politicians have demanded more openness on the part of the Fed and questioned the bank bailouts, putting it in a long-running battle to restore public trust in its conduct and role in the economy.

In economic news this week; According to the minutes of the last Fed meeting, the Fed Gods are apparently split regarding inflation pressures. Factory orders fell. The U.S. trade deficit widened. And companies reduced the number of job openings but hired more aggressively in February.

Federal Reserve officials seemed evenly split at their March meeting on the key question of whether the recent pickup in core inflation would prove persistent, according to minutes of the meeting released Wednesday. So-called core inflation refers to prices excluding gasoline and food. While the Fed targets inflation with those baked in, it looks to the core measure of inflation as a gauge of where prices will be in the future. And the core PCE price index has risen substantially in recent months.

“Some” Fed officials saw the increase as consistent with a firming trend on inflation. At the same time, “some” others expressed the view that the increase in price pressures were unlikely to be sustained. Fed officials want to see inflation strengthen to its longer-run 2% target. Inflation running below that level suggests an economy that could easily get stuck in sub-par growth.

The Fed is more worried that the gains in inflation would be fleeting said the recent gains appeared to reflect “increases in prices that had been relatively volatile in the past.” They appeared reluctant to lift interest rates at their next meeting, which takes place at the end of this month. “Several” Fed officials noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate,” the minutes said. At the same time, “some” other Fed officials spoke in favor of an April rate hike. The Fed’s next policy meeting is April 26-27. Before the minutes were released, traders saw a very slim chance of a rate hike then and only see one rate hike all year, according to the CME FedWatch tool.

Factory orders fell sharply in February, after a collapse in bookings for oil equipment and planes. Factory orders fell 1.7%, the Commerce Department said Monday, marking the third fall in four months. Orders for durable goods were revised to show a 3% decline instead of the previously reported 2.8% fall. Orders for equipment in the hard-hit mining, oil field and gas field machinery segment dropped by 20.1%. Those for nondefense aircraft dropped by 27.2%, and for defense aircraft by 28%. Shipments fell 0.7%, the tenth drop in 11 months. Inventories fell 0.4%, the eighth straight monthly decline.

The U.S. trade deficit widened 2.6% in February largely because of a rise in imports, marking the third increase in a row and the biggest gap since the end of last summer.

Americans added to their debt at a steady solid pace in February, suggesting that consumer spending will continue to prop up the economy. Consumer credit grew at an annual rate of 5.8%, for a gain of $17.2 billion, in February, the Federal Reserve said Thursday. The gain was above market expectations of a $14 billion gain. Consumer credit has been consistently solid over the past year with no monthly gains below 5%. Total consumer borrowing, which does not include mortgage debt, is now $3.57 trillion. Credit growth in January was revised up sharply, to a $14.9 billion gain from the prior estimate of $10.5 billion.

On the Employment front: Companies reduced the number of job openings but hired more aggressively in February, according to data released Tuesday. The number of job openings fell to 5.45 million from 5.6 million in January, the Labor Department reported. That’s still the second highest level since July.The job openings survey, known by its JOLTS acronym, covers the labor market with a one-month lag to the payrolls report.

As reported last Friday, the U.S. reported 215,000 new jobs in March in another show of strength for the economy. The steady of pace of hiring is likely to reassure the Federal Reserve that the economy remains on sound footing, laying the groundwork for another increase in interest rates as early as June. We have been creating more than 200,000 jobs a month since 2014.

The unemployment rate, meanwhile, rose a notch to 5% from 4.9%, but that was because more Americans joined the labor force, the Labor Department said Friday. The size of the labor force has increased by 2 million people in the past five months, a clear sign work is easier to find. “The increase in the unemployment rate came not because of fewer people working, but because more people were looking for jobs.

If you like this commentary please visit and “Like” my Facebook page. I put all of my prospective buyers through underwriting so that when they place their offer, it is as close to “cash” as you can get. So to get your clients “underwriter approved”, please contact me and get your offer accepted!

I have a personal App for your phone that replaces my business card. You can contact me (various formats), run the mortgage calculator, get RE/Mortgage news, and have access to my social media sites including this weekly commentary. You can even share my app with others. Please check it out and let me know what you think. Click on the following link from your phone and hit “add to home screen, then click “add” and you’re done.